Kevin Drum

Earmarks, Schmearmarks

| Fri Nov. 12, 2010 2:08 PM EST

I am, of course, thrilled to see conservatives beating each other senseless over earmark reform. They've spent years demagoguing Democrats over it, and the spectacle of Sen. James Inhofe now complaining that he's being demagogued over earmarks is pretty priceless. Still, Inhofe makes an unassailable point: earmarks direct spending, they don't increase it. Actual overall appropriation levels are set separately, and earmarks merely take a bit of spending authority away from the federal bureaucracy and hand it directly to members of Congress. Over at The Corner, however, Stephen Spruiell offers a novel argument about why Inhofe is wrong:

Proponents of reform will readily concede that earmarks direct rather than add spending. But that is the problem: As long as powerful appropriators are getting to direct their share, they are less concerned with the overall size of the spending package. I think it’s fairly hard to dispute that point. The number of congressional earmarks doubled between 2001 and 2005, coinciding exactly with the years that congressional Republicans let non-defense discretionary spending grow at a rate not seen since the early seventies.

Senator Inhofe attempts to minimize the importance of this correlation by producing one of his own: “Over the course of the last several years, the overall number and dollar amount of earmarks has steadily decreased. During that same time, overall spending has ballooned by over $1.3 trillion.” Well, let’s just put it this way: Special inducements and temptations aren’t necessary to get a Democrat-controlled Congress signed up for more spending. The lesson of 2001 to 2005 is that earmarks hypnotize Republican majorities into spending like Democrats. Earmarks are our problem, not theirs.

"Earmarks hypnotize Republican majorities into spending like Democrats." I love that. It's yet another example of a creative conservative argument that never would have occurred to me. It also suggests that Republicans are really cheap dates. Apparently all it takes to get them to spend like drunken sailors is a few million dollars each in earmarks. That's some party you have there, Stephen.

In any case, I don't really have a dog in this fight. Giving members of Congress some limited amount of say over how money is spent in their districts actually seems defensible to me, as long as it's public and transparent. On the other hand, the opportunities for mischief are pretty obvious too, so doing away with earmarks wouldn't bother me much. What's more, deep sixing earmarks entirely would have the salutary effect of (a) forcing alleged deficit hawks to talk about something a little more serious, and (b) putting an end to pretzel-bending arguments like Spruiell's. Count me in, I guess.

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In Which I Praise the Deficit Commission

| Fri Nov. 12, 2010 1:32 PM EST

Via Andrew Sullivan, Bulworth defends the deficit commission's Social Security proposal from a progressive point of view:

This Social Security package would restore long term solvency, go a long way towards protecting it from would-be privatizers, and enhance benefits for the lowest lifetime earners through two new provisions. It also includes a tax max increases, which progressives tend to support. The benefit formula reduction — which some Progressives erroneously liken to "means-testing" — is actually just an extension of the already existing progressive benefit structure.

This criticism seems particularly odd coming from progressives who normally want the more well to do to bear the brunt of any Social Security fixes. Progressives can't clamor for higher payroll taxes or higher limits to the "tax max" while simultaneously criticizing benefit reductions that affect higher-than-average earners. In short, this is overall a pretty progressive package of changes to the program, which Progressives and Democrats should support.

For what it's worth, I agree. The co-chairs' Social Security proposal is not the one I'd make, but it's pretty solidly in the mainstream of reasonable takes on shoring up Social Security's finances. Basically, it's a collection of small revenue increases and small benefit cuts, with the cuts focused on high earners and everything phased in over several decades. The worst part of their plan is the increase in retirement age — I think there are much better ways of reducing benefits — but the increase they propose is pretty modest: full retirement goes from 67 to 68 by 2050. That's not Armageddon.

If it were up to me I'd do a bit more on the revenue side, possibly increasing the payroll tax from 12.4% to 13%, for example. But as a discussion draft, Simpson-Bowles is OK, and it's a good demonstration of my point that fixing Social Security is pretty easy if both sides are even minimally serious about finding a compromise.

Other aspects of the plan still strike me as unserious. The 21% cap is just a sop to conservative dogma, not something related to deficit reduction. Ditto for the tax plan. The discretionary cuts are mostly pie in the sky, and in any case don't really deserve much space in a document concerned with long-term deficit reduction. And the healthcare discussion is woefully underpowered.

But the Social Security proposal? It's not bad.

Taxes and the Deficit Commission

| Fri Nov. 12, 2010 12:01 PM EST

Criticism of the deficit commission report continues apace. Matt Yglesias:

The flipside of the Simpson-Bowles document’s unsound aggregate cap on revenue is that they were very uncreative in their exploration of revenue options. For example, what about a tax on greenhouse gas emissions? The mere fact that the conservative movement is currently engaged in a massive fit of pretending that greenhouse gas emissions aren’t a problem doesn’t change the fact that greenhouse gas emissions are, in fact, a problem. Taxing them would reduce the quantity of greenhouse gas emissions and help mitigate the problem. It also creates revenue.

In fairness, they do recommend a gasoline tax. It's a small one, but at least it's there as a talking point. So I guess they deserve a bit of credit for that.

But that brings up another point: one entire section of the report is devoted to comprehensive tax reform. Why? Broadening the base of the tax system and reducing marginal rates might or might not be a good idea, but it doesn't really have anything to do with deficit reduction.1 In fact, the only tax-related subject that's germane to deficit reduction is increases in total tax revenue. The report mainly addresses this in its discussion of reducing tax expenditures, which is a perfectly defensible way of raising more revenue. But why go beyond that to a root-and-branch proposal for tax reform that's essentially revenue neutral?

As with the entire report, the answer is ideological: this is less a report on reducing the deficit than it is a report on remaking the government in a conservative image. Which, again, is fine, if you're a conservative think tank and this is what you believe. But it's not what a report should be if it's a supposedly nonideological effort to reduce deficits. That kind of report should focus solely on cutting spending and increasing revenue, not on remaking the tax system.

1The co-chairs' argument — though it's articulated only glancingly in the body of the report — is that their version of tax reform would spur economic growth and thus help reduce the deficit. This is a defensible argument, but it's also a highly ideological one. It's really not appropriate in a document that's supposedly a neutral take on deficit reduction.

World Meets, Does Nothing

| Fri Nov. 12, 2010 11:07 AM EST

Here's a shocker:

Leaders of the world’s biggest economies agreed on Friday to curb “persistently large imbalances” in saving and spending but deferred until next year tough decisions on how to identify and fix them.

Still, I suppose merely acknowledging the problem in a big public forum represents a bit of progress. A "single," as President Obama puts it.

By the way, if you want to reduce the federal deficit, guess what else has to happen? The trade deficit has to come down. This is one bellwether of seriousness on the budget deficit: if you mention the trade deficit, you're serious. If you don't, you're not. So without looking, anyone want to place a bet on whether the Simpson-Bowles deficit commission report mentions the trade deficit? I'd take bets on this with all comers, but I'd be cheating. I already looked.1

1Answer: no it doesn't. This is yet another stake in the heart of the report's supposed seriousness.

Is Our Kids Learning?

| Thu Nov. 11, 2010 5:13 PM EST

Another day, another confusing magazine article about American education. This one is by Amanda Ripley in the Atlantic, and it focuses solely on how our top performing students do compared with those in other countries. In particular, how do our top students do in math?

We’ve known for some time how this story ends nationwide: only 6 percent of U.S. students perform at the advanced-proficiency level in math, a share that lags behind kids in some 30 other countries, from the United Kingdom to Taiwan. But what happens when we break down the results? Do any individual U.S. states wind up near the top?

Incredibly, no. Even if we treat each state as its own country, not a single one makes it into the top dozen contenders on the list. The best performer is Massachusetts, ringing in at No. 17....“If all American fourth- and eighth-grade kids did as well in math and science as they do in Massachusetts,” writes the veteran education author Karin Chenoweth in her 2009 book, How It’s Being Done, “we still wouldn’t be in Singapore’s league but we’d be giving Japan and Chinese Taipei a run for their money.”

Aha! Massachusetts may not be up there with Taiwan or Japan, but they're better than any other state in America. So what's their secret?

Is it because Massachusetts is so white? Or so immigrant-free? Or so rich? Not quite. Massachusetts is indeed slightly whiter and slightly better-off than the U.S. average. But in the late 1990s, it nonetheless lagged behind similar states — such as Connecticut and Maine — in nationwide tests of fourth- and eighth-graders. It was only after a decade of educational reforms that Massachusetts began to rank first in the nation.

What did Massachusetts do? Well, nothing that many countries (and industries) didn’t do a long time ago. For example, Massachusetts made it harder to become a teacher, requiring newcomers to pass a basic literacy test before entering the classroom. (In the first year, more than a third of the new teachers failed the test.) The state also required students to pass a test before graduating from high school — a notion so heretical that it led to protests in which students burned state superintendent David Driscoll in effigy. To help tutor the kids who failed, the state moved money around to the places where it was needed most. “We had a system of standards and held people to it — adults and students,” Driscoll says.

Wait a second. The literacy test sounds like a good idea, but it seems fairly disconnected from the performance of our top math students. California has required new teachers to pass both a literacy and math test for nearly 20 years and we rank barely above Turkey in advanced math proficiency. Ditto for a high-school graduation exam, which plainly doesn't have any impact on top-tier students who have been performing above the basic graduation level all along.

And that's it. Maybe Massachusetts did some other stuff, but I assume Ripley chose to highlight their most important reforms, not the trivia. And their most important reforms seem pretty unlikely to have affected the math scores of our crème de la crème. So what's the deal? Once again, after reading a popular account of education reform, I'm more confused than I was when I started.

Hard Truths

| Thu Nov. 11, 2010 1:45 PM EST

I want to make a followup point to my post last night about the deficit commission. Mainly, that post said that if you're serious about the long-term deficit, you need to be serious about healthcare costs. That's pretty much the whole ballgame. The rest is fluff. Matt Steinglass comments:

Mr Drum writes for a liberal magazine. And here he is saying that the main thing we need to do in order to restrain growth in the deficit and in government spending, which will otherwise bankrupt us, is to cut the biggest government entitlement programme, Medicare....Shouldn't this be big news for our contrarian press? "Liberals Call for Cuts to Entitlements!" Aren't we amazed that supposedly big-government liberals want to slash the projected Medicare budget? What an example of responsible bipartisanship on their part!

And yet the press pays absolutely no attention to this. In general, liberals are given no credit whatsoever for acknowledging reality and calling for cuts in social-welfare entitlement programmes. So here's what I'm hoping. I'm hoping some of you read my initial comment about wanting to retweet what Kevin Drum wrote on this and thought, "Well obviously a liberal who writes for Mother Jones would be saying that in the long term massive budget deficits threaten our future, and the only way to seriously reduce that long-term deficit is to slash Medi...wait a minute." Just take that "wait a minute", and maybe give people some credit for coming to reality-based conclusions.

Actually, this is only half the story. It's true that I think we need to rein in spending on both Medicare and healthcare spending in general. Be amazed, conservatives! But there's a flip side to this: the American population is aging and medical care is getting more expensive. This is simply a fact, and it means that even if we slow the rate of healthcare inflation we're going to need more money for healthcare. You want Hard Truths? That's a hard truth. We need to rein in healthcare spending and we need to raise taxes to pay for the higher healthcare costs of an aging population. Anybody who's serious about addressing the long-term deficit needs to deal with this instead of indulging in fantasies.

But fantasies are largely what we get from the co-chairs' report. Nick Baumann takes a closer look at what kinds of cost cutting they recommend for Medicare and concludes that it's (a) politically unrealistic and (b) ineffective anyway:

This is seriously third-rail stuff. There's medical malpractice reform....strengthening the Independent Payment Advisory Board [which is] already under attack by Senate Republicans....Seniors' copays and deductibles would increase.

....After putting forth proposals that will irk trial lawyers, doctors, hospitals, and seniors, the co-chairs still aren't done — they also want to take on Big Pharma....The rest of the co-chairs' health care proposals include ticking off veterans, whose copays would increase; medical colleges, who would receive less in federal subsidies; and states, which would receive less money to cover long-term care for poor seniors. In short, the chairs' health care proposals will force nearly every significant interest group in America to take a haircut.

The kicker is that, under the co-chairs' proposal, a large part of the health care "savings" would be immediately spent [on the "doc fix"]....This is the ultimate proof of Kevin's point: even though our main budget problem is that health care costs too much, the deficit commission wants to spend most of its controversial health care "savings" on making sure that doctors keep getting paid at a level that satisfies the American Medical Association. It's more evidence of just how difficult the long-term deficit problem really is.

In other words, they've offered up a plan that's almost impossible to envision passing, and even at that it would accomplish barely anything. This deserves far more serious attention from centrist deficit hawks, and it deserves attention on both sides of the deficit equation. On the cost control side it means thinking bigger, and on the revenue side it means acknowledging that taxes will have to go up regardless. Liberals will naturally resist a lot of the cost cutting proposals, but at least they acknowledge that cost cutting has to happen. That's a start. But conservatives? I don't have to tell you their position. This makes reducing the long-term deficit impossible. Dealing with healthcare spending can only be done if both sides have political cover, and that means both sides have to make those famous Tough Choices we hear so much about. That will only happen when conservatives start acknowledging demographic reality.

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Tax Cut-O-Rama

| Thu Nov. 11, 2010 11:51 AM EST

A couple of days ago I suggested that Democrats, having screwed up their response to the extension of the Bush tax cuts before the election, shouldn't bother wasting time on it during the lame duck session either. Instead, "Allow the Bush tax cuts to expire completely and let the 112th Congress deal with it."

After thinking about it, I'd like to revise and extend those remarks. Basically, there's not much time in the lame duck session, and wrangling over the tax bill could pretty much eat it up completely if Dems allow it to. So what I really think is this: either Dems should punt it into the 112th Congress or they should just cave in quickly and pass a comprehensive extension quickly. But if they do the latter, please please please tell me they're not going to do what McClatchy suggests they might do:

The Bush-era tax cuts that are set to expire on Dec. 31 are expected to be extended temporarily by the lameduck Congress, with a two-year extension the most promising compromise.

....On the Republican side, Sen. Orrin Hatch, R-Utah, who's slated to become the top Republican on the tax-writing Senate Finance Committee, said this week that a temporary extension "would garner support from Democrats and Republicans alike. That path forward is an extension of all the tax relief well past the next election."....The temporary extension is gaining momentum because it would allow both parties to use the issue in the 2012 campaign. And making the tax cuts permanent wouldn't require a vote until a lame duck session after the 2012 presidential election.

Look, I get it: Democrats are idiots. Nothing we can do about that, I guess. But the whole reason the tax issue imploded on them this year is because the Democratic caucus couldn't handle the strain of separating the middle-income tax cuts from the high-earner tax cuts during election season. Why would they set themselves up for the exact same dynamic two years from now?

So if they're going to do this, extend the cuts for three years. The economy could probably use an extra year of tax breaks anyway, and a three-year extension means they'll come up for renewal in 2013, when they can be dealt with relatively calmly. And Republicans can hardly object to an extra year of tax cuts, can they?

(Well, yeah, of course they can. But it would be a stretch even for them.)

Democrats have already proven they can't handle the electoral pressure of separating the tax cuts during an election year. There's no reason to think they're going to grow a stiffer spine in two years, and Republican control of the House will make it harder to separate them anyway. So be smart. If they're going to cave, cave for three years.

Lede of the Day: Businesses Irate Over Record Profits

| Thu Nov. 11, 2010 10:58 AM EST

Here's the lead story today from those noted communists at Bloomberg:

Investors around the world say President Barack Obama is bad for the bottom line, even though U.S. corporations are on track for the biggest earnings growth in 22 years and the stock market is headed for its best back-to-back annual gains since 2004.

The quotes in the rest of the story really have to be read to be believed. I'm not going to bother excerpting any of them because I haven't had breakfast yet and my blood sugar needs immediate attention. Long story short, though, they just want them some nice tax cuts. Everything else is just fluff.

Missile Control Hysteria

| Thu Nov. 11, 2010 12:49 AM EST

I suspect that 67 votes just aren't there to approve the New START strategic arms treaty no matter when it comes up for a vote, so in a way the arguments pro and con don't matter very much. Still, the sheer level of shriekiness and hysteria that conservative opponents are mounting is remarkable even for an era practically personified by conservative shriekiness and hysteria. That's especially true considering how favorable the treaty is for U.S. interests and the fact that it boasts almost unanimous support by military and national security pros of all stripes.

Anyway, that's all just a preamble to Fred Kaplan's latest deconstruction of anti-New START hysteria, this time from the dynamic duo of John Bolton and John Yoo. It's all right here, and worth reading just for its comprehensive look at how empty the opposition is. It's really something.

Troops OK With Gay Troops

| Thu Nov. 11, 2010 12:34 AM EST

This is unsurprising, but still welcome news:

A Pentagon study group has concluded that the military can lift the ban on gays serving openly in uniform with only minimal and isolated incidents of risk to the current war efforts, according to two people familiar with a draft of the report, which is due to President Obama on Dec. 1.

More than 70 percent of respondents to a survey sent to active-duty and reserve troops over the summer said the effect of repealing the "don't ask, don't tell" policy would be positive, mixed or nonexistent, said two sources familiar with the document. The survey results led the report's authors to conclude that objections to openly gay colleagues would drop once troops were able to live and serve alongside them.

Apparently the Marine Corps remains the biggest obstacle, but even there only 40% of all Marines are concerned about lifting the ban. That seems pretty manageable. I don't expect the reactionary right to change its tune on this regardless of the evidence, but this report might still be enough to break loose a few Republican votes for repeal of DADT in the lame duck session. Keep your fingers crossed.